Silan Micro: Product + Service to create a high-end semiconductor brand

Silan Micro: Creating a high-end semiconductor brand

[Source: "High-tech LED-Lighting Market" December issue Reporter / Xiong Huan Huan]

"We are positioning ourselves as a semiconductor company. Therefore, we are not only seeing the LED chip market, but also peripheral circuits, modules, power devices and ancillary products." Hangzhou Silan Microelectronics Co., Ltd. (hereinafter referred to as "Slan Micro", 600460.SH) Secretary of the Board of Directors and Chief Financial Officer Chen Yue first mentioned in an interview with the reporter of "Lighting Market", "Slan Micro provides an integrated comprehensive service, not only providing products, but also submitting to customers. The overall plan."

Shilan Mingxin, a wholly-owned subsidiary of Silan Micro, mainly produces LED display chips. Before 2011, the company's revenue ranked first in the domestic display chip field. However, according to the announcement of Silan Micro's 2011 annual report, Silan Mingxin achieved operating income of 341 million yuan, a decrease of 13.14% over 2010, and a net profit of 55.03 million yuan, a decrease of 54.12% over 2010. As of the end of the third quarter of 2012, the net profit of Silan Micro-owned listed company shareholders was approximately 15.51 million yuan, a year-on-year decrease of 88.94%.

On the one hand, the company's performance has declined, and on the other hand, the market share of LED display chips has been overtaken by competitors. In this grim situation, Silan Micro seems to have another plan, waiting for an opportunity to move, and relying on the brand strategy to achieve a successful counterattack.

IDM mode

Chen Yue pointed out two reasons why Silan Micro entered LED chip manufacturing: First, LED is part of the semiconductor industry, and will drive the development of the semiconductor industry in the future, in line with the company's own positioning; Second, the LED industry has good prospects, from landscape lighting to The indoor and outdoor display screens, TV backlights, and general lighting, the market is gradually starting.

In Chen Yue's view, the rapid expansion of domestic chip companies is mostly simple replication. MOCVD mainly comes from the United States and Germany; LED technology is mostly controlled by Japan, Europe, the United States, South Korea, Taiwan and other enterprises; and most domestic LED chip companies only do production, homogenization is serious, enterprises are desperately trying to break through while only seeking breakthroughs. Can spell the price. "This is also the reason for the continuous 'diving' of chip prices since the second half of 2010." Chen Yue believes that in the face of industry reshuffle, companies should reflect in time.

"Slan Micro uses IDM (Design and Manufacturing Integration) as the development model to develop LED power supply and other related products around high voltage, high power and high frequency process platforms; and strives to combine semiconductor technology and LED technology to develop high quality LEDs. Chip. We provide customers not only color screen chips, color screen tubes, but also color screen systems, which ultimately presents a whole solution." Chen Yue said that this idea will continue to the field of lighting, "the most important in the LED lighting system. It is a power management system. The development of the LED lighting industry requires chips, circuits, and system advantages. The three are indispensable."

Post-production step by step

Chen Yue said that Shilan Micro's expansion in LED is not fast. The company's third quarterly report showed that the LED business revenue was approximately 131.9968 million yuan, down 54.30% year-on-year; the operating cost was approximately 125.529 million yuan, down 32.94% year-on-year; the gross profit margin was 4.90%, down 30.30% year-on-year.

Silan Micro invested more than 200 million yuan in LED equipment in 2010, mainly purchasing AIXTRON's 55-piece machine, but the equipment delivery was one quarter later than the contract period. “At the time, the industry was too hot, MOCVD equipment was in short supply, and new models still had some problems when they were delivered. It took a certain amount of time to fully debug.” Chen Yue believes that the entire industry was irrational in 2010 and the equipment technology was not mature. The lag in the investment of Silan micro-devices has led to the failure to release the production capacity in time, which has lost its cost advantage in the process of rapid price decline.

In Chen Yue's view, the current chip industry's production capacity is excessive and prices are falling, and new areas will be continuously developed. "I personally think that if there is another capital shock, it may also enter the downstream industry, such as packaging. The chip industry has already landed, and there will be no more influx of capital. So the advantages of Silan Micro rely on semiconductors."

At the same time, Chen Yue believes that the LED lighting market is a market determined by consumers. LED lights have to be recognized by the public, and there must be brand enterprises in the middle and lower reaches of the industry. In the current situation of shoddy and mutual imitation, the quality is not enough, and consumers are hard to agree. Therefore, the LED lighting market is the process of continuous trial, continuous selection and continuous acceptance by consumers, and will not happen overnight. "After recognizing this, Silan Micro has determined the LED market development strategy - step by step. We are based on product system development, and peripheral circuit development, serving the future to become a brand in the corresponding field rather than a customer who is keen on price wars, so Silan Wei There is a choice on the timing of the investment, not blind."

"In the future, after the 4-inch process is opened, LED devices may be connected to existing 4-inch semiconductor devices. The price of bulk-buying equipment in general enterprises is high, and the entire equipment line may not be used, but Shilanwei can The use of other parts of the semiconductor industry will greatly increase the utilization of equipment." Chen Yue said that with the maturity of the industry, LED equipment can borrow a large amount of semiconductor equipment, and Silan's experience in semiconductors can also be applied to the LED production process. in.

“Slan Micro will follow the rhythm of its own products, provide products with optimal solutions and provide value-added services to customers.” Chen Yue believes that since Shilan Micro is positioned in semiconductor companies, it should aim at competition with international semiconductor giants. Instead of just seeing the domestic LED chip market, "the real wolf is an international semiconductor giant, not an LED chip company. We have to see who the competitors are from the product terminal, how to cut into Samsung, Sony, Panasonic, Osram, Philips. Product system, this can bring lasting power to the company." Silan Micro: to create a high-end semiconductor brand

[Source: "High-tech LED-Lighting Market" December issue Reporter / Xiong Huan Huan]

"We are positioning ourselves as a semiconductor company. Therefore, we are not only seeing the LED chip market, but also peripheral circuits, modules, power devices and ancillary products." Hangzhou Silan Microelectronics Co., Ltd. (hereinafter referred to as "Slan Micro", 600460.SH) Secretary of the Board of Directors and Chief Financial Officer Chen Yue first mentioned in an interview with the reporter of "Lighting Market", "Slan Micro provides an integrated comprehensive service, not only providing products, but also submitting to customers. The overall plan."

Shilan Mingxin, a wholly-owned subsidiary of Silan Micro, mainly produces LED display chips. Before 2011, the company's revenue ranked first in the domestic display chip field. However, according to the announcement of Silan Micro's 2011 annual report, Silan Mingxin achieved operating income of 341 million yuan, a decrease of 13.14% over 2010, and a net profit of 55.03 million yuan, a decrease of 54.12% over 2010. As of the end of the third quarter of 2012, the net profit of Silan Micro-owned listed company shareholders was approximately 15.51 million yuan, a year-on-year decrease of 88.94%.

On the one hand, the company's performance has declined, and on the other hand, the market share of LED display chips has been overtaken by competitors. In this grim situation, Silan Micro seems to have another plan, waiting for an opportunity to move, and relying on the brand strategy to achieve a successful counterattack.

IDM mode

Chen Yue pointed out two reasons why Silan Micro entered LED chip manufacturing: First, LED is part of the semiconductor industry, and will drive the development of the semiconductor industry in the future, in line with the company's own positioning; Second, the LED industry has good prospects, from landscape lighting to The indoor and outdoor display screens, TV backlights, and general lighting, the market is gradually starting.

In Chen Yue's view, the rapid expansion of domestic chip companies is mostly simple replication. MOCVD mainly comes from the United States and Germany; LED technology is mostly controlled by Japan, Europe, the United States, South Korea, Taiwan and other enterprises; and most domestic LED chip companies only do production, homogenization is serious, enterprises are desperately trying to break through while only seeking breakthroughs. Can spell the price. "This is also the reason for the continuous 'diving' of chip prices since the second half of 2010." Chen Yue believes that in the face of industry reshuffle, companies should reflect in time.

"Slan Micro uses IDM (Design and Manufacturing Integration) as the development model to develop LED power supply and other related products around high voltage, high power and high frequency process platforms; and strives to combine semiconductor technology and LED technology to develop high quality LEDs. Chip. We provide customers not only color screen chips, color screen tubes, but also color screen systems, which ultimately presents a whole solution." Chen Yue said that this idea will continue to the field of lighting, "the most important in the LED lighting system. It is a power management system. The development of the LED lighting industry requires chips, circuits, and system advantages. The three are indispensable."

Post-production step by step

Chen Yue said that Shilan Micro's expansion in LED is not fast. The company's third quarterly report showed that the LED business revenue was approximately 131.9968 million yuan, down 54.30% year-on-year; the operating cost was approximately 125.529 million yuan, down 32.94% year-on-year; the gross profit margin was 4.90%, down 30.30% year-on-year.

Silan Micro invested more than 200 million yuan in LED equipment in 2010, mainly purchasing AIXTRON's 55-piece machine, but the equipment delivery was one quarter later than the contract period. “At the time, the industry was too hot, MOCVD equipment was in short supply, and new models still had some problems when they were delivered. It took a certain amount of time to fully debug.” Chen Yue believes that the entire industry was irrational in 2010 and the equipment technology was not mature. The lag in the investment of Silan micro-devices has led to the failure to release the production capacity in time, which has lost its cost advantage in the process of rapid price decline.

In Chen Yue's view, the current chip industry's production capacity is excessive and prices are falling, and new areas will be continuously developed. "I personally think that if there is another capital shock, it may also enter the downstream industry, such as packaging. The chip industry has already landed, and there will be no more influx of capital. So the advantages of Silan Micro rely on semiconductors."

At the same time, Chen Yue believes that the LED lighting market is a market determined by consumers. LED lights have to be recognized by the public, and there must be brand enterprises in the middle and lower reaches of the industry. In the current situation of shoddy and mutual imitation, the quality is not enough, and consumers are hard to agree. Therefore, the LED lighting market is the process of continuous trial, continuous selection and continuous acceptance by consumers, and will not happen overnight. "After recognizing this, Silan Micro has determined the LED market development strategy - step by step. We are based on product system development, and peripheral circuit development, serving the future to become a brand in the corresponding field rather than a customer who is keen on price wars, so Silan Wei There is a choice on the timing of the investment, not blind."

"In the future, after the 4-inch process is opened, LED devices may be connected to existing 4-inch semiconductor devices. The price of bulk-buying equipment in general enterprises is high, and the entire equipment line may not be used, but Shilanwei can The use of other parts of the semiconductor industry will greatly increase the utilization of equipment." Chen Yue said that with the maturity of the industry, LED equipment can borrow a large amount of semiconductor equipment, and Silan's experience in semiconductors can also be applied to the LED production process. in.

Positioning high-end brand

According to Chen Yue, the reason why Silan Micro focused on the color screen chip market was mainly to compete with foreign counterparts such as Nichia (Japan) and CREE (Cui Rui). At present, the overseas high-end display market is basically monopolized by Nichia. Chen Yue believes that the high-end audience market pays more attention to the brand effect and belongs to a relatively narrow field. Enterprises will not enter the same market as the lighting chip market.

In July 2009, Silan Micro invested in Hangzhou Meikale Optoelectronics Co., Ltd., focusing on the packaging of high-end LED display tubes. "At present, the world's leading color screen manufacturers Daktronics and Barco are using the card of Meikale. The goal of Meikale is to occupy more than 50% of the global color screen chip market in the future, and to compete with Japan for pricing power." The more it shows that Silan Micro will adhere to the "integration" (high-quality chip + high-end packaging) in the color screen chip market, and enhance the brand power; in the lighting chip market, it will not be involved in the sealing and application fields.

"Silanwei's current production capacity is in short supply for a long time. Twelve years ago, half of our epitaxial wafers were imported. Now we have 100% full coverage, which basically meets the demand for orders, and the production and sales rate is close to 90%. The chip market is changing too fast, supporting resources such as talents, technology, and capital have to keep up. It is impossible for enterprises to have equipment. Silan Micro now has 24 MOCVD equipment, and has a production capacity of 60,000 to 70,000 epitaxial wafers. We have certain competitiveness in the future. In the future, we will further expand our production capacity. As long as the product market is opened, the brand is established, and the technology is excellent, the production capacity can be digested, and the gross profit space naturally rises.” Chen Yue believes that the domestic lighting market is in its infancy. Many enterprises are swarming up, and the situation of serious homogenization will inevitably lead to overcapacity. However, it is a long-term policy for enterprises to control quality through innovative research and development, and the gross profit margin will increase. In his view, the normal gross profit margin of the chip industry should be above 20%, in order to bring a net profit of 8%-10%, which is also the level that advanced manufacturing should reach.

Layout western guarding giants

On June 8 this year, Silan Micro released the 2012 non-public offering plan, issuing no more than 85 million shares, and not less than 30 million shares. The total amount of funds raised is not more than 879.95 million yuan, and the issue price is not less than 9.59 yuan / share. Silan Micro plans to increase its capital into Dusitlan through this non-public issuance of funds, and increase the investment in the first phase of Chengdu Silan project to develop LED chip business and power module and power device products for lighting.

“The western region has advantages in energy and labor costs. Silanwei’s plant construction and power supply in Chengdu are designed according to the high specification requirements of integrated circuits, and will expand multiple new MOCVDs. In the future, if the epitaxial wafers in the industry turn 4 inches, we will The advantage will be more obvious." Chen Yue said that the future production capacity of Silan micro LED chips is expected to reach 1.5-200 billion pieces / month.

“Slan Micro will follow the rhythm of its own products, provide products with optimal solutions and provide value-added services to customers.” Chen Yue believes that since Shilan Micro is positioned in semiconductor companies, it should aim at competition with international semiconductor giants. Instead of just seeing the domestic LED chip market, "the real wolf is an international semiconductor giant, not an LED chip company. We have to see who the competitors are from the product terminal, how to cut into Samsung, Sony, Panasonic, Osram, Philips. The product system, which can bring lasting power to the company."